July 24 (Bloomberg) -- New Jersey’s judges don’t have to
pay 9 percent more toward their pensions under a law requiring
increased retirement contributions from state workers, the
state’s highest court concluded.

The New Jersey Supreme Court ruled today that the 2011 law
requiring public employees such as teachers, firefighters and
police to pay more for their pensions violates the state’s
constitution by improperly reducing judges’ salaries.

The pension law “serves a legitimate public policy goal,
but that goal, as applied to justices and judges, must be
achieved through constitutional means,” the court said in a 3-2
ruling in Trenton.

New Jersey Governor Chris Christie, who pushed for pension
changes as part of an effort to fix the state’s finances, vowed
last year to seek an amendment to the state’s constitution that
would subject judges to a public-pension overhaul if the courts
found they were exempt.

The governor said today that the ruling was “an example of
a liberal, activist Supreme Court run amok,” and the state
shouldn’t have “a special class of people who do not have to
pay their fair share.”

State Senate President Steve Sweeney, the highest-ranking
Democrat in New Jersey, said the ruling was a disappointment.
The public-pension changes instituted by New Jersey last year
will save taxpayers $121 billion over 30 years, according to the
governor’s office.

‘Poor Health’

Today’s ruling “will not be the final word on this
issue,” Sweeney said in a statement. “The pension system of
our judges can go bankrupt just as easily as any, and perhaps
even more easily given its current poor health.”

“Judges should not be insulated from economic reality by a
dubious claim that paying their fair share for the richest
benefits in state government is an impediment to judicial
independence,” Senate Republican Leader Tom Kean Jr. said in an
e-mailed statement.

New Jersey’s pension-system funding deficit of
$53.9 billion in 2010 fell to $36.3 billion in 2011 after
Christie signed bills increasing employee contributions to
benefits, raising the retirement age for new workers and
freezing cost-of-living adjustments.

Unfunded Liability

The unfunded liability rose again in June 2011, to
$41.8 billion, after the governor skipped a $3 billion payment.
The budget Christie signed for the fiscal year that began July 1
includes a $1.03 billion pension contribution.

The challenge to the increased contributions for judicial
pensions came from Hudson County Superior Court Judge Paul
DePascale, who sued over the laws enacted at Christie’s urging.
The measures require increased contributions from almost 500,000
state workers.

The New Jersey State Bar Association, a group representing
the state’s lawyers, filed a brief with the state’s highest
court arguing judicial independence required judges be held
exempt from such salary reductions.

Mercer County Superior Court Judge Linda Feinberg ruled in
October 2011 that requiring judges to pay more for their
pensions violates constitutional provisions barring the
reduction of judicial salaries.

She rejected New Jersey’s claims that requiring additional
health and pension contributions didn’t amount to a pay cut for
the state’s 432 judges. Feinberg stepped down as a judge in May.

Unfair Exemption

Lawyers for Christie argued that it’s unfair to exempt
judges from the statute requiring public workers to pay more for
their benefits.

The average New Jersey judge will collect pension payments
of more than $2 million while paying about $59,000 into the
system during a career, Christie has said.

In its divided ruling, the court held that New Jersey’s
constitution has provisions barring lawmakers from cutting
judges’ pay to preserve judicial independence. Reducing pension
benefits amounted to such a cut, the three-judge majority
concluded.

“The United States Supreme Court has never signaled that
even an indirect reduction in a judge’s salary during the term
of appointment would be tolerable under the Federal
Constitution,” the majority wrote in their 36-page decision.

Dissenting Opinion

As a result of the increase in pension contributions,
judges currently serving would face a pay cut of at least
$17,000 each, the majority said. Most New Jersey judges earn
$165,000 a year, according to the state government website.

Two justices dissented from that constitutional
interpretation, saying the prohibition on reducing judicial
salaries didn’t extend to contributions to pensions or health-care plans.

The law “cannot be viewed as an attack on judicial
independence, by intent or in effect,” Justice Anne Patterson
wrote in her dissent.

While both sides found the benefits law “was a laudable
policy, the majority was unwilling to have its interpretation of
the language trumped by the policy,” Peter Verniero, a former
New Jersey attorney general who now practices law in Newark,
said in a telephone interview.

The case is DePascale v. State of New Jersey, 069401, New
Jersey Supreme Court (Trenton).